SEBI has issued a clarification on validity period of omnibus approval of shareholders for Related Party Transactions (RPT). As per the circular, the shareholders’ approval of omnibus RPTs approved in an Annual General Meeting (AGM) shall be valid upto the date of the next AGM for a period not exceeding fifteen months. Further, in case of omnibus approvals for material RPTs, obtained from shareholders in general meetings other than AGMs, the validity of such omnibus approvals shall not exceed one year. The move is aimed at facilitating listed entities to align their processes to conduct annual general meetings (AGMs) and obtain omnibus shareholders' nod for material RPTs. This comes after the Securities and Exchange Board of India (Sebi) received representations seeking clarity on the period of validity of the omnibus approval where the transactions are material and shareholders' approval is also required.
SEBI LODR rules specifies that omnibus approval granted by the audit committee will be valid for a period not exceeding one year and will require fresh approvals after expiry of one year and as per the Companies Act, the time gap between two AGMs cannot be more than 15 months.
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